U.S. drilling activity hit a 40-year low at the end of June

 Natural gas futures prices beyond the front month saw modest increases

The UK gas system remained well-supplied on Friday as demand fell off heading into the weekend. Spot and day ahead gas prices were little changed but week ahead and balance-of-month contracts shed 1.60p and 1.45p respectively. Natural gas futures prices beyond the front month saw modest increases on the day with most contracts up by over a penny week-on-week. Norwegian deliveries remained robust, but LNG send=out was well down on the average daily send-out in June with fewer shipments expected at UK terminals this month

 Carbon prices gained on Friday to hit new 12-month highs

Carbon prices gained on Friday to hit new 12-month highs with EU ETS unit prices for 2021 an 2022 settling above €28.00 per tonne. Despite the renewed strength in emissions prices and rising gas prices, power futures generally eased buy move-ment was marginal. Prompt gas prices responded to a forecast for very high wind generation on Monday with the day ahead contract shedding £5.00/MWh. Wind generation is forecast to hit 10 GW today, up from around 5GW on Friday. French nuclear output was also forecast higher with increased exports to the UK this week.  

U.S. market was closed on Friday for the Independence Day holiday weekend

Crude oil prices surrendered some of Thursday’s gains which followed stronger-than-expected U.S. employment data for June. Brent crude shed 34 cents to settle at $42.80 a barrel. The U.S. market was closed on Friday for the Independence Day holiday weekend, but Brent crude traded on the Intercontinental Exchange. The continuing escalation in coronavirus cases in the U.S. and elsewhere is keeping a lid on the market currently as falling production, rather than rising demand, is more likely to establish market balance. U.S. drilling activity hit a 40-year low at the end of June with many shale-oil producers, including the giant Chesapeake Corp. filing for bankruptcy.  

 Crude has resumed the upward trend

Demand on the UK gas system is forecast at a year-to-date low of 150MCM for today and forecast deliveries are currently 22MCM long. Exports via the Bacton-Zeebrugge interconnector have halved since July 1 and gas-fired power demand is down as wind generation is forecast at almost 10MCM today. Trading on the UK gas market has been typically slow for a Monday morning and as yet no bid-offer spreads are available to suggest market direction. On the oil market, crude has resumed the upward trend after Friday’s minor loss with Brent up by 82 cents to currently trade at $43.62 a barrel.